Rennie v Darebin CC [2010] VCAT 1719

1. Pursuant to section 127 and clause 64 of Schedule 1 of the Victorian Civil and Administrative Tribunal Act 1998 the permit application is amended by changing the name of the permit applicant to:

1. The decision of the Responsible Authority is set aside.
2. In permit application D/714/2009 no permit is granted.

Mr P O'Farrell, barrister instructed by Madgwicks Lawyers.

• Mr R Siet, owner and manager of the hotel (lay witness).
• Ms C Peterson, town planner of Ratio Consultants (expert witness).
• Mr R Whitehouse, gaming management consultant of PVS Australia Pty Ltd (expert witness).

The land is located on the northwest corner of Plenty Road and Bell Street in Preston. It is a two storey building that has existing use rights as a hotel (it has operated since 1911). The hotel contains a general bar, function room and dining area/function room with a beer garden at the ground floor level, and another function room at first floor level. The hotel has two car parking areas, to the north along Plenty Road and to the west along Bell Street. The hotel has a general liquor licence.

To fill in some existing windows on the west elevation of the hotel.

To install and use 30 electronic gaming machines (EGMs).

Section 82 Planning and Environment Act 1987.

Clause 34.02 To construct a building or to construct or carry out works on land in B2Z.

Clause 63 The construction of buildings and/or works associated with an existing use (existing use rights as a hotel).

Bells Hotel Pty Ltd v Port Phillip CC [2010] VCAT 569;

Branbeau Pty Ltd v Victorian Commission for Gaming Regulation [2005] VCAT 2606;

Bright Newbay Pty Ltd v Bayside CC [2010] VCAT 1347;

CK & Sons Pty Ltd v Bayside CC [2010] VCAT 505;

De Group Pty Ltd v Wyndham CC [2010] VCAT 607;

Prizac Investments Pty Ltd v Maribyrnong CC [2009] VCAT 167;

Randall Pty Ltd v Willoughby CC [2005] NSWCA 205; (2006) 144 LGERA 119;

Sayer Property Holdings Pty Ltd v Wyndham CC [2010] VCAT 1364.

1. Ms Rennie is seeking a review of the decision by Darebin City Council ('the Council') to grant a permit to the existing hotel (the Stolberg Hotel[1]) located at 197 Plenty Road, Preston for:
   • the enclosure of three windows (buildings and works)[2]; and
   • the installation and use of 30 electronic gaming machines (EGMs).
2. The hotel operates under a general liquor licence that allows 530 patrons on the premises between the hours of 7.00 am and 3.00 am the following day (except on the mornings of Good Friday and Anzac Day, and on Sundays when the hours are 10.00 am to 1.00 am the following day).
3. Mr Siet has owned the hotel for many years and has also been the manager of the hotel for approximately the last 8 years. During that time he has undertaken alterations and renovations to the building and is currently completing some renovations to the first floor to create a large function room. Mr Siet gave evidence the hotel holds approximately three to four functions a week involving anything from a 21st birthday party, to a 50th birthday party, to a sports club's awards night. We have inspected the hotel premises and acknowledge that Mr Siet and his family have created an attractive venue.
4. This proposal is primarily to modify an existing small function room at the west end of the ground floor of the hotel (fronting Bell Street) to create a gaming room containing 30 EGMs. It also includes the enclosure of three windows on the west elevation of the building, but this aspect of the application is not a matter of concern to Ms Rennie. Rather, Ms Rennie is seeking a review of the Council's decision to approve the installation and use of EGMs, and her concerns are summarised as:
   1. Procedurally, the public notification process was not adequate; and
   2. The Council officer's assessment of the application was lacking as the social and economic impacts of the proposed installation and use of EGMs have not been adequately considered by the Council.

1. We wish to first deal with Ms Rennie's concerns about the public notification process. This process exists for any application which a Responsible Authority (in this case, the Council) considers may cause material detriment. The extent of notification is then determined by the Council and public notification by way of signs on site and in the local paper is the mechanism by which the broader community (rather than just neighbouring properties) can become aware and involved in a permit application. This extent of notification took place in this case, and we are satisfied it was appropriate and sufficient.
2. In our opinion, the key issue in this case is the appropriateness of the EGMs having regard to the social and economic impacts of the location of the EGMs. We agree with Ms Rennie's concern about the social and economic impacts of this proposal not having been adequately assessed by the Council. Much of the assessment in the Council officer's report consists of a quote (almost three pages) from the Prizac Investments Tribunal decision and a table of benefits and disbenefits (a matter we will comment upon further later in this decision). The Council did not seek to obtain the level of information[3] that has been provided to us in this hearing (for example, the content of Ms Peterson's evidence) in its consideration of the planning application. We are of the view the information provided at this hearing is a good example of the level of inquiry and consideration that may be necessary in order to reach an informed view about the social and economic impacts associated with EGMs in a particular location.
3. Having considered the submissions and evidence presented, we find the social and economic impacts of the location of the EGMs are inappropriate despite the appropriateness of the premises itself. We will now explain why.

1. Before this hotel can install and use EGMs, it needs to obtain two different permissions - a planning permit and a gaming licence. The planning permission focuses upon whether the hotel is an appropriate premises suitable for gaming and, secondly, the social and economic impacts of the location of the EGMs. The gaming permission requires consideration of (amongst others) whether the net economic and social impact of the machines would or would not be detrimental to the wellbeing of the community of the municipal district in which the premises are located.
2. It is up to the individual applicant as to whether these permissions are sought concurrently or consecutively and, if so, in what order. In this case, the applicant has sought planning permission first and we were advised the gaming application is now being processed[4].
3. A question that arises from this hearing is to what extent should the social and economic impacts be considered in the planning application, given it is a matter that must be considered in the gaming application. One of the purposes of clause 52.28 is to ensure that the social and economic impacts of the location of gaming machines are considered.
4. The Council submitted that there has not been any in depth Tribunal discussion about what this particular purpose is meant to add, given consideration of social and economic impacts of a proposal has long been a relevant planning consideration[5]. However, Mr O'Farrell pointed out the Planning and Environment Act 1987 requires consideration of "any significant social and economic effects of the use or development for which the application is made". This is different to the purpose of clause 52.28, which requires consideration of social and economic impacts generally, and not just significant effects.
5. Essentially, the Council's position is that its assessment of the benefits and disbenefits was sufficient for a planning application. In support of this, the Council relied upon an extract from paragraph 9 of the Bright Newbay decision:

... a more detailed analysis of the economic and social impacts upon a community is a matter best dealt with as part of the consideration under the Gambling Regulation Act rather than as part of the planning application.

1. The Council also submitted the above extract is consistent with the approach taken by the Tribunal in Sayer Property Holdings and accepted by the Tribunal in DE Group Pty Ltd.
2. Whilst Mr O'Farrell generally agreed a more detailed analysis of the social and economic impacts upon a community is dealt with under the Gambling Regulation Act, he submitted the social and economic considerations of the planning and gaming applications do overlap. The Gambling Regulation Act focuses upon the wellbeing of the community in the municipal district. We agree with Mr O'Farrell a key consideration of the planning application is the social and economic impacts of the location. In our opinion, the Planning and Environment Act and Victorian planning schemes require consideration of the significant social and economic impacts of the proposal (for example section 60(1A)(a) of the Act); and the social and economic impacts of the location of gaming machines (pursuant to clause 52.28) respectively.
3. We are aware that in other cases before this Tribunal submissions have been put that the social and economic impacts do not need to be considered or will not be pursued in the planning application because they have or will be considered in the gaming application[6]. Indeed, Mr Nickas made a similar submission to us by stating the Council's support for the planning application does not necessarily translate into support for the gaming application; and the Council will consider a more detailed assessment of the social and economic impacts in the gaming application. We reiterate our findings in paragraph 14 above, namely the social and economic considerations in the planning and gaming applications do overlap and planning focuses upon the particular location whereas gaming licensing focuses upon the community of the municipality as a whole. We note our findings are consistent with those expressed by the Tribunal in the Bells Hotel case[7], and we agree the extent of the 'location' to be considered will need to be determined on a case by case basis[8]. Mr O'Farrell submitted Ms Peterson's evidence in this case contained some matters that may be more relevant to the gaming application, and whilst that may be so we find her evidence as a whole most helpful in considering the social and economic impacts associated with this location. We are of the opinion this is the key issue in this case.
4. However, before explaining the reasons for our decision on this issue, we wish to comment on the Council's Gaming Policy; and the other aspect of one purpose of clause 52.28, being the appropriateness of the premises (the Stolberg Hotel) for gaming.

1. At the time the Council made its decision to support this proposal, it had a draft gaming policy. As it was a draft policy, it was not given any weight in the consideration of the merits of the planning application by the Council. However, Mr Nickas advised us during this hearing that the policy has now been adopted by the Council[9], albeit the Council does not seek to rely upon it in this case.
2. Despite Council not relying upon it, Mr Nickas provided us with a copy and explained the Council intends to "link it into the MSS" as a reference document. We note the policy requires an applicant to (amongst other requirements) "demonstrate that there is a net economic and social benefit to the community". The aspiration to 'link' the policy with the planning scheme is good but the policy requirement to demonstrate a net economic and social benefit to the community is not supported. We adopt the findings of the Tribunal in Bright Newbay at paragraphs 25 to 28, particularly that the wording "to demonstrate a net economic and social benefit" should be reviewed to ensure it accords with clause 10 of the State Planning Policy Framework and/or section 3.3.7 of the Gambling Regulation Act 2003.

The Appropriateness of the Premises (Stolberg Hotel) for Gaming

1. We agree with Mr O'Farrell that this hotel provides a range of services and facilities, and the proposed gaming room will be yet another hotel facility offering a recognised form of entertainment to the community. We acknowledge the Stolberg Hotel is a large venue and the gaming room will occupy a small component of it (about 8.5% of the floor area). As such, the premises itself is capable of accommodating gaming and we regard it as an appropriate premises.

1. In previous Tribunal decisions, the appropriateness of the location has been considered having regard to the socio-economic profile of the locality within which the gaming venue is located and, more specifically, the profile of the likely patrons. In some cases the patronage has been determined by undertaking a survey of patrons[10] and in other cases, often new venues, the patronage is generally accepted to fall within a 2.5 to 5 kilometre radius of the gaming venue.
2. In this case, Ms Peterson advised she had had insufficient time to undertake a patron survey before preparing her evidence, hence she has considered the socio-economic profile of likely patrons based upon the 2.5 to 5 kilometres radius of the hotel. Ms Peterson's evidence focuses particularly upon "primary patron profile", being residents from the postcodes of Thornbury and Preston for a number of reasons including that these postcodes almost totally comprise the 2.5 kilometre radius.

Social & Economic Indicators of Primary Patron Catchment

1. Ms Peterson's evidence thoroughly explored all social and economic indicators relevant to the primary patron catchment and she summarised this as follows:

Having reviewed a wide array of social and economic indicators, I am satisfied that the primary patron catchment of the Stolberg Beer Café shows considerable signs of disadvantage. In particular, the patron catchment has:

• Below average SEIFA index scores;
• Lower average weekly household income and higher than average weekly mortgage repayments and a higher number of low income earners;
• Lower disposable income;
• Reasonably well educated community, especially in Thornbury;
• Higher than average single parent families and families comprising couples and children;
• High levels of renting especially in Thornbury, and high levels of social housing in Preston;
• Relatively high level of home ownership especially in Preston;
• Low SEIFA and JSS rankings; and
• High unemployment.

There is a greater level of disadvantage in Preston than Thornbury, which will largely be a result of the emerging gentrification of Thornbury in recent times and the high level of public housing in Preston, which reduces the effect of gentrification.[11]

1. Ms Peterson stated the primary issue within the parameters of this planning application is whether the location of the proposed machines will have an unacceptable impact on problem gamblers as 30 new machines within this municipality:

... could result in an increase in problem gambling for a small percentage of the adult population. It can also be assumed that there will be adverse effects which would flow to the community from any increase in problem gaming behaviour.

1. Essentially, Ms Peterson's view is this proposal is acceptable because there is already "exceptional access to gaming venues" in this area, including 8-9 other venues within 2.5 kilometres of this hotel. As such, Ms Peterson is of the view that vulnerable people who could be or become problem gamblers are already significantly exposed to gaming in this area.
2. This view is of some concern to us. Essentially, the socio-economic indicators appear to us to suggest that this is not a suitable location for a gaming premises. However, because there is already so much access to gaming, Ms Peterson advances that another gaming venue will have little effect. We do not support this line of reasoning and are of the view this would result in a poor planning outcome.

1. Ms Peterson advised there are 1,740 EGMs in 30 venues (in the municipalities of Darebin, Yarra, Moreland and Banyule) within 5 kilometres of the Stolberg Hotel today. She described this as "the highest, if not one of the highest, concentrations of EGMs she has ever seen".
2. There are nine venues within a 2.5 kilometre radius of this hotel, being the primary patron catchment. Of these venues, three are clubs that are not considered to be significant competitors to hotel gaming venues (who have a proven history of higher expenditure). This is largely due to clubs having restricted access, different social settings and atmospheres. This leaves six other comparable gaming venues within the primary patron catchment.
3. One of the Victorian Government's actions to tackle problem gambling was the implementation of regional caps on the number of EGMs permitted in a particular area. There are 19 municipalities with caps, including Darebin that cannot exceed 8.85 EGMs per 1000 adults and its current density is 8.84 EGMs. This density is well above the Metropolitan and State averages. Ms Peterson advised caps also exist to the east, west and north of this municipality. In October 2009, the maximum permissible number of EGMs in Darebin was capped at 986, and the current number of operational machines is at that limit - 986. As a result of the recent auction process, Ms Peterson expected the number of machines in Darebin to decrease by 178, so 808 EGMs will be operational in 2012. Mr Whitehouse stated this reduction is the most significant reduction across metropolitan Melbourne.
4. Ms Peterson and Mr Whitehouse estimated there will be a reduction in expenditure on gaming throughout the City of Darebin as a result of the reduction in the number of machines. Hence, whilst Mr Whitehouse estimated an expected increase in annual expenditure from this proposal in the order of $560,000, he also expressed the view it is a conservative estimate. He pointed out it does not take into account the reduction of machines at other venues in Darebin due to the auction, which could mean there will be less than the existing expenditure today in the Darebin LGA.
5. There is no doubt Darebin's existing high exposure to gaming machines will be decreased through the reduction arising from the 2012 auction. Ms Peterson estimated the density of machines will fall in 2012 from 8.84 to 7.057 EGMs per 1000 adults (including this proposal) or 6.79 EGMs per 1000 adults (without this proposal). We note Ms Peterson also estimated the density of EGMs per 1000 adults across Melbourne will increase from 6.29 to 6.79. We cannot help but question whether the auction results leading to a fall in density of 6.79 EGMS per 1000 adults in Darebin without this proposal is a preferable outcome given it is likely to be on par with the estimated Melbourne average.
6. In 2012, there will be 8 venues within 2.5 kilometres and 24 venues within 5 kilometres of this hotel. Ms Peterson was of the view this constitutes significant access to gaming and hence problem gamblers already have significant access to venues and machines in this region. She advised if there were significantly fewer venues/machines, she would be concerned about the proximity of this hotel to a range of nearby health facilities (including Darebin Community Health Centre "where some people attending would be considered vulnerable"). However, given the significant access to gaming post the auction, Ms Peterson stated this proposal will only have:
   • A "minor effect" in overall accessibility for problem gamblers;
   • "Little effect" having regard to its proximity to nearby health facilities; and
   • "Marginal impact" on vulnerable groups including problem gamblers.
7. Hence, we find Ms Peterson's evidence is not that this proposal will have no detrimental impact, but rather that the detrimental impact is minor, little or marginal given existing levels of access to EGMs. Mr O'Farrell agreed with our interpretation of Ms Peterson's evidence. Again, we find it is this existing high level of accessibility that makes this proposal acceptable in Ms Peterson's opinion. However, Ms Rennie submitted this approach suggests the people of Preston in the primary catchment area deserve a lesser level of protection from excessive EGM density than other areas of Melbourne.
8. We asked Ms Peterson when one should form the view that 'enough is enough' in regard to the number (and hence density) of EGMs in a location. She agreed this is a pertinent question and noted a similar question is now being posed in considering late night liquor licence applications due to the Victorian Government's recognition of the potential cumulative impact. Ms Peterson suggested that perhaps the regional caps controlling machines in 19 municipalities are the guide as to when there are enough EGMs. We are not persuaded by this. If that were the case, it would arguably be unnecessary to consider the location of a proposed venue and the social and economic impacts of the location of the gaming machines through a planning permit process. In addition, the caps are based upon municipalities. In this case, the primary catchment within 5 kilometres includes at least four municipalities, three of which Ms Peterson advised have caps. However, these caps are dependent upon the respective population of the municipality and not a cap based upon the population within this specific 5 kilometre catchment.

Disbenefits, Including the Risk of Problem Gambling

1. In Branbeau, the former president of the Tribunal, Morris J postulated theories that appear to have widespread acceptance. Firstly, that problem gambling is more likely to emerge if gaming machines are located in poorer communities compared with richer communities. Secondly, that it is desirable to avoid locating gaming machines in poorer areas.
2. We are of the opinion the socio-economic profile of the primary patron catchment of this venue could be described as a 'poorer community'. The combination of this profile and one of the highest concentrations of EGMs Ms Peterson has ever seen is a tell-tale indicator of the exposure of this particular location to the risk of problem gambling. Ms Peterson's evidence that this proposal will have an impact, albeit a small or marginal one, but is that good planning? Mr Whitehouse's evidence is that a small proportion of the expenditure will be new expenditure[12], therefore not all of the expenditure would be transferred. The purpose of clause 52.28 is to consider the appropriateness of the location of the EGMs and we are not persuaded by the submissions or evidence that the benefits of this proposal in this location outweigh or neutralise the disbenefits, including the risk of problem gambling. Despite the hotel itself being a suitable premises, we are not persuaded the location of this hotel is suitable.
3. Thus far in the planning applications for gaming before this Tribunal since 2009[13], we note there have been few examples of gaming machines in poorer areas[14]. Ms Peterson agreed the socio-economic profile in Prizac Investments is comparable to this proposal as it is described as follows:
   1. We acknowledge that there are a large number of gaming machines located within the municipality of Maribyrnong, that the community has easy access to gaming machines and that there is a high percentage of the Maribyrnong community on low incomes who are particularly disadvantaged and as such may be more vulnerable to problem gambling. This is an existing situation.
4. We set out some of the Tribunal's key findings in Prizac Investments and then apply them to the facts before us:
   • The proposed new venue would not increase the number of gaming venues in the municipality. That is the same in this proposal.
   • The proposed EGMs were to be removed generally from areas more disadvantaged than the proposed new venue's location and this was an overall positive benefit to the community. In our case, we cannot say this as, due to the auction process, it is no longer known where the EGMs may come from. We acknowledge Mr Whitehouse's evidence that the majority of the expenditure for Stolberg Hotel will be transferred expenditure from other venues. However, this expenditure could be from venue(s) in a more disadvantaged area, or it could also be from venue(s) in a less disadvantaged area, in which case this proposal would arguably worsen the situation.
   • The proposed venue was a club with membership rules and requirements reducing availability for problem gamblers and reducing impulse access. In our case, a hotel is the proposed venue where access to gaming is available to all of the local community during the majority of the hours that the hotel is open[15].

1. Taking the policy approach articulated in clause 10 of the SPPF of balancing a proposal in favour of net community benefit and sustainable development, Mr O'Farrell encouraged us to also balance the "heavy positives" or benefits in favour of this proposal against these potential detrimental impacts.
2. Mr O'Farrell described the perceived benefits as:
   • The fact that gaming is a legitimate form of entertainment and recreation;
   • The wide range of services and facilities offered by Stolberg Hotel;
   • The gaming room is 'low level' and is just another addition to the full range of services and facilities offered by 'a family hotel'; and
   • The table of benefits contained in the Council officer's report.
3. Two pages of the Council officer report contains a table of the benefits/disbenefits of the proposal. Mr Nickas acknowledged some of these had more to do with policy and built form rather than social and economic impacts, and he identified the following extracts from the table as relevant:
   • Disbenefits - proximity to low SEIFA index districts; general impacts of gambling; and increased access to gambling in the local area.
   • Benefits - accessible to residents along tram route 86; patrons may drive or travel shorter distances compared with distances to existing venues that may be further away; creates 6 jobs; creates jobs during construction; community contributions by venue operator; gaming not dominant use as 12% of floor area used[16]; located in an area with high EGM density; and small scale venue with better observation.
   • Unknown - where the EGMs will come from is unknown hence this could be a disbenefit, benefit or have no impact.
4. We are of the view a number of the perceived benefits could also be described as disbenefits as, for example:
   • The site is well located close to bus and tram stops; and it may be a shorter distance to visit this venue than other gaming venues for some patrons.
   • The construction work involved in setting up the gaming venue is minor as it is within an existing room where some minor internal works will be required, hence this is not a significant or ongoing benefit.
   • We note Ms Peterson acknowledged during Ms Rennie's cross-examination that whilst 6 jobs may be created in this venue, a higher number of jobs will potentially be lost throughout this catchment because of the overall reduction in EGMs in 2012. We find these 6 jobs remain an economic benefit to this particular location but acknowledge this may not be viewed in the same way as part of the gaming considerations that relate more broadly to the municipality.
   • The small size of the venue has not been demonstrated to reduce the impact or effect from gambling on this community to any meaningful level.
   • Finally, we are of the opinion the community contribution is a positive benefit but we are not persuaded it carries as much weight under the Planning and Environment Act 1987 in an assessment of the location of the gaming machines (rather than the wellbeing of the community under the Gambling Regulation Act).
5. Overall, we are not persuaded these benefits of the proposal swing the pendulum in favour of the proposal or would facilitate a neutral outcome overall.

1. Having considered the submissions and evidence presented, we find the social and economic impacts of the proposed gaming machines in this particular location are inappropriate. Therefore, we have decided to set aside the Council's decision and refuse to grant a permit.
2. We are cognisant that our decision means the enclosure of the three windows has not been approved. We encourage the applicant to lodge a new planning application with the Council for this building work and we hope the Council will assist the applicant by processing such an application expeditiously.

[1] Also described on the Liquor Licence and referred to by Mr O'Farrell and Ms Peterson as the Stolberg Beer Café. For simplicity, we have used one of Ms Peterson's description - the Stolberg Hotel.

[2] We were advised these works have already been undertaken.

[3] Either from the permit applicant through a further information request or from the Council's own resources including its social planning staff.

[4] The Council made it clear that whilst it is supporting this planning application, this does not necessarily mean it will support the gaming application (which was to be considered by the Council after this hearing).

[5] The Council specifically referred to section 60(1A)(a) of the Planning and Environment Act 1987.

[6] For example, in the De Group case the Council submitted the social impacts and socio-economic impacts of the gaming component would be pursued by the Council in any submission to the Victorian Commission for Gambling Regulation; and in the Bells Hotel case the applicant submitted it is not the Tribunal's role to revisit the social/demographic implications as they have already been considered by the VCGR and its decision should be given great weight.

[7] Refer to paragraphs 24-28 of the Bell's Hotel case.

[8] On this point in the Bells Hotel case, a decision of the New South Wales Court of Appeal is relied upon, being Randall Pty Ltd v Willoughby CC [2005] NSWCA 205; (2006) 144 LGERA 119.

[9] The Council adopted the Gaming Policy on 2 August 2010.

[11] Page 41 of Ms Peterson's evidence report

[12] The table at paragraph 1.35 of Mr Whitehouse's evidence estimated new annual expenditure at Stolberg Hotel of $259,475.

[13] When the first Tribunal decision was made following the current version of clause 52.28 coming into effect.

[14] For example, in Sayers Property Holdings Tarneit was described as a fairly robust demographic compared to other areas of Wyndham; and in Bells Hotel the collector level of the SEIFA Index of Disadvantage was one of the most disadvantaged, but at a municipal level it was one of the least disadvantaged.

[15] Based upon Mr O'Farrell's submission that the gaming room should remain open until the hotel closes at 3.00am.

[16] This was based upon the hotel without an increased first floor function room that is now under construction.